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Solana’s memecoin mania is over. But an upcoming airdrop could bring it back

Solana’s memecoin mania is over. But an upcoming airdrop could bring it back
Several metrics show that memecoin trading on Solana appears to be subsiding. Credit: Andrés Núñez
  • The memecoin mania that encapsulated Solana traders for the last two months appears to be subsiding.
  • An upcoming Solana airdrop may be bigger than both the Pyth and Jito airdrops combined.
  • Despite the decline, some of Solana’s metrics have improved.

Activity metrics on Solana are returning to earth after an end-of-year surge saw trading volume briefly surpass that of Ethereum, but a new airdrop could reignite the buzz around the blockchain.

Memecoins, tokens without any function or use case that trade solely on their popularity and sentiment, drove much of the December boom.

Metrics from Solana data platform Solscan show that memecoin trading appears to be subsiding. The number of newly minted tokens on Solana has dropped over 65% from its December 27 high, while decentralised exchange volumes dropped 18% over the past week.

At the same time, popular Solana memecoins, such as BONK, have dropped more than 60% from their all-time highs.

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BONK has retraced much of its gains over the past month.

Airdrops on Solana from Pyth and Jito preceded the surge of activity that occurred late last year.

If the same trend holds, there is good reason to believe that an upcoming airdrop from decentralised exchange aggregator Jupiter could spark another increase in trading activity.

Solana activity plummets after Christmas boom

A lack of activity on Solana amid crypto winter meant that newly-created tokens were non-existent for much of 2023. But after the Pyth and Jito airdrops injected an estimated $290 million into the Solana ecosystem, token creation accelerated to new all-time highs.

These highs proved short-lived. Just two weeks later, the number of daily newly-created tokens fell over 67% from a high of 7,918 to just over 2,600.

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Total SPL token mints

Decentralised exchange — or DEX — volumes have suffered a similar decline.

In December, Solana surpassed Ethereum in total DEX volume for the first time on December 14, and again from December 20 to 25. Today, Solana DEX volumes have fallen back behind Ethereum.

Memecoin prices also suffered from the decline in trading. Two of the more popular memecoins on Solana, BONK and WIF, are down over 60% from their December highs. Dozens of less popular memecoins have fared even worse.

The airdrop effect

Historically, airdrops have often preceded a surge in activity.

In September 2020, decentralised exchange Uniswap airdropped over $500 million worth of tokens to early users on Ethereum. Following the airdrop, DEX trading volumes on Ethereum exploded, rising from $17 billion in September 2020 to nearly $43 billion over the next four months.

More recently on December 7, the day of the Jito airdrop, Solana DEX volumes reached a yearly high before going on to set a new high on December 22.

Many Solana bulls are now looking to the upcoming Jupiter airdrop to rekindle activity.

Jupiter announced in November that it will airdrop 40% of its soon-to-be-launched JUP token to early users.

With a 10 billion total token supply and pre-launch markets like Hyperliquid currently valuing JUP at around $0.65, this could amount to over $2.6 billion in airdrop value, or over nine times the amount given to users in the Pyth and Jito airdrops.

Jupiter has confirmed that it will airdrop tokens over four rounds, with the first round distributing one billion JUP.

Some stability

But, amongst Solana’s declining metrics, some appear to be stabilising.

The number of active wallets on Solana is still significantly higher than prior to the surge in activity.

Through the third quarter of 2023, the daily active wallets never surpassed more than 300,000, while now, even after a sharp decline in other metrics, daily active wallets still average over 640,000.

Total active wallets on Solana

Total value locked, a metric that measures deposits into DeFi protocols, on Solana, has also remained elevated. It hit a 2023 high of $1.5 billion on December 25, and has held above $1.2 billion since the start of 2024.

Solana's total value locked has held above $1.2 billion since the start of 2024.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

Ryan Celaj is DL News’ New York-based Data Correspondent. Reach out with tips at ryan@dlnews.com.